Bank Nifty has been in a strong downtrend in the last one year. It recorded a high of 20,907.55 last January and has since plummeted over 27 per cent. The index fell 5.8 per cent last week and broke a key support level of 16,000 to close at 15,206.3. The sharp 10 per cent fall in the last two weeks has increased the momentum of the overall downtrend. The next key supports are poised at 14,800 and 14,635 — the 50 per cent Fibonacci retracement level. These levels are likely to be tested in the near term. Inability to bounce back from the above mentioned supports and a strong fall below 14,635 will increase the danger of the index targeting 14,000 and 13,900 — the 200-week moving average support.

On the other hand, if the Bank Nifty manages to reverse higher from 14,800-14,635 supports, there is a possibility of a corrective rally to 15,500 or even 16,000. The 21-week moving average at 16,950 and a trendline resistance at 17,250 are key resistance levels to watch. The current downtrend will signal a reversal only on a strong break above these hurdles. But such a strong bounce back is unlikely given the current nervousness and strong risk aversion in the global financial markets.

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